01.11.2018 Korea sell off with some notes about the Korean crypto investor
There is is a sell off in all crypto in Korea at the moment. (Edit, seems to have bottomed out since I began writing this article.)
I write this post to give people a little insight into the Korean market. I want everybody to understand that there is great enthusiasm, and instability. Don't place too much faith in the Korean crypto investor.
Case in point, Roger Ver was recently on Korean TV to talk about cryptocurrencies. However, most people were talking about a 23 year-old who was also on TV because he claimed to have started with a 80 dollar investment and turned it into a 30 million dollar crypotocurrency portfolio. To me, the story about the investor doesn't completely ring true. However, this encapsulates the both the interest, craziness, and the growing mania surrounding cryptocurrencies in Korea.
Reason for the sell off today:
Comments made to reporters at noon today.
박 장관은 이날 과천 법무부 청사에서 열린 신년 기자간담회에서 "가상화폐에 대한 우려도 굉장히 커 법무부는 기본적으로 거래소를 통한 가상화폐 거래를 금지하는 법안을 준비 중"이라며 이같이 말했다.
정부는 지난달 28일 가상화폐 투기 근절을 위한 추가 특별대책을 추가로 내놓을 때 비이성적 투기 상황을 방치할 수 없다면서 거래소 폐쇄를 위한 특별법 제정도 검토하겠다는 입장을 공식적으로 밝힌 바 있다.
Park said at the New Year's Press conference held at the Gwacheon Justice Office on the day, "The Ministry of Justice is preparing legislation that basically prohibits virtual currency trading through exchanges.
The government has officially announced that it will consider imposing a special law on the closing of exchanges, saying, "We can not neglect irrational speculation when we add additional special measures for eradicating virtual currency speculation on September 28.
How people -that I spoke to - are viewing this in Korea
This is not new. As the article states, this is what the minister stated in September of 2017. It seems unlikley. However, because it was said again, it is causing concern for some in Korea.
The rumor mill in Korea
This is not to stoke rumor but give people an insight into some of the crazy conversations that people are having in Korea. You can compare this to some of the conversations on this forum.
Unfortunately, there may be less investment based on fundamentals in Korea than in other countries. A great amount of investment, but not all, is driven by crazy rumors and here is some of that. Don't place all of your trust in the rationality of crypto investors because as you know, there may be very little of that. Also, don't place all of your trust in Korean investors just because the volume of Korean investment is so high so they must be more enlightened because they are able to quickly recognize emerging trends. There is a lot of craziness in investment/investors here as well.
Without further delay, here are some rumors today:
1. The government may move towards closing exchanges
(this seems unlikely. with the amount of money circulating through exchanges, and the potential economic stimulus this could bring it seems unlikley...unless the government feels confident they can push all of this money back into the stock market, but this is unlikely.)
2. The government is moving towards curtailing money laundering by conglomerates
(There is a rumor that Hyundai is using crypto to build slush-funds outside of Korea - this is in line with the conduct of conglomerates in Korea. This has always gone on. Recently, the former chairman of Samsung is catching heat for hidden wealth/stocks. Probably true, but unlikely that it can be the main motivator of government policy. )
3. The government is trying to push down prices to encourage investors to not leave the stock market, or encourage investors to move back towards the stock market
(I haven't seen the figures but somebody stated 5 trillion won left the Korean stock market)
4. The government is trying to push down prices before a wave of new crytpo investors expected in late January
5. Politicians in Korea are pushing down the market so they can find an entry point and invest themselves.
(This is most likely untrue but funny. This rumor is probably circulating because Korean politicians so so incredibly corrupt. They are very, very, very corrupt. What is probably true is that they are muscling operators of exchanges for kickbacks. The focus over and over again has been the amount of money circulating through the exchanges and how it is unregulated.)
6. Wild rumor - Chinese crypto exchanges will open again. The rumor, is that somebody sued the chinese government for the money he lost when they closed the exchanges. The supreme court ruled the government is not liable for losses but that the petitioner should have been able to buy and sell on exchanges.
(This one seems like the craziest rumor. I would bet on this one being part of a pump and dump strategy with an altcoin)
Side Note 1
One of the people involved in statements about banning crypto (Choi Heung-sik, Director of the Financial Supervisory Service,)is really angering people. There is an online petition on the Blue House (Korean equivalent of the White House) website to have him removed from his position. I support this. He doesn't seem to be in step with officials and the current policies in other countries.
However, despite the petition, his removal seems unlikely.
I believe, but not sure if I can trust my memory 100%, that he has a little bit of a vendetta against crypto. If I remember correctly, in a press conference in the past, he assured reporters that bitcoin was a fad. He asked if anybody wanted to bet that the price of bitcoin would drop because he believed it would. Well, it didn't at the time and reporters being reporters, they needled him about this. I believe he was a little embarrassed.
Side Note 2
There is increasing pressure for government regulation. I spoke to a lawyer who is suing the government on behalf of crypto investors in Korea. He says regulation is coming. There are many complaints by investors who feel they have been wronged by crypto exchanges. They claim fraud (crashes of exchange servers at times when it is beneficial to the exchanges) and unfair practices (the high premiums levied by exchanges). While some are suing the government to relax restrictions, others are petitioning the government launch regulatory measures.